Delhi airport to charge fliers more from 15 May

Delhi airport to charge fliers more from 15 May

Mumbai: Passengers flying into and out of Delhi airport will have to pay more beginning 15 May, as the airports regulator approved a nearly four-fold increase in airport charges, which experts say will make the airport the most expensive in the world.

The regulator also approved the levy of a user development fee from arriving passengers for the first time in India.

International passengers arriving at Delhi airport will have to pay a user development fee ranging from 436 to 881 depending on the distance flown, according to the Airports Economic Regulatory Authority of India, or Aera. The amount will rise to 461-932 in the next financial year, it said on its website. Domestic passengers will have to pay 195.80-391.60. This will increase next year to 207.32-414.65. Delhi airport already charges an airport development fee from domestic and international passengers flying out. Airport development fees are collected to fund an airport’s future infrastructure development, and user fees are for using existing facilities.

Delhi International Airport Pvt. Ltd (DIAL), which runs the Indira Gandhi International Airport in New Delhi, demanded a 774% increase in airport charges whereas Aera suggested an increase of 334%. The final increase to 345% is due to the delay in approving the hike. DIAL had expected to increase charges from 1 April.

Airport charges include payments for landing, parking and housing planes and charges for using automated check-in machines and the infrastructure to fuel planes.

Airlines are unhappy with the decision.

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Mint’s P.R. Sanjai saysregulators have approved a 345% hike in charges at Delhi airport, even levying fees on passengers landing there

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M. Shivkumar, senior vice-president (finance) at India’s largest airline by passengers carried, Jet Airways (India) Ltd, said airlines cannot absorb the increase. “We have no other option but to pass on this hike to passengers," he said.

Domestic carriers accumulated losses of $6 billion in the past five years and will likely add another $2.5 billion in losses in fiscal 2012, according to consulting firm Centre for Asia Pacific Aviation. Foreign carriers see an increase of $50-100 (around 2,500-5,250) a ticket due to the hikes. “The increase approved by Aera is extremely disappointing. This will make Delhi the world’s most expensive airport," said Albert Tjoeng, assistant director, corporate communications (Asia Pacific) at International Air Transport Association (Iata), which represents some 240 airlines comprising 84% of the total air traffic.

“It will also have a larger impact on India and its economy, with an expected 5-8% decrease in demand at Delhi as a result of higher costs, a fall in tourist arrivals and further damage to local and international airline connectivity. This is a big step backwards for Delhi’s ambition to be an aviation hub," Tjoeng said.

Pieter De Man, general manager, Indian sub-continent, Air France-KLM, said the increases will burden passengers and affect the India operations of many carriers.

“Further, we foresee an approximate increase of $50-100 (Rs 2,500-5,250) per ticket owing to this hike, which might lead to many airlines reassessing their operational viability in terms of capacity, frequency from the country," he said. “Delhi will not be a financially viable airport to operate to."

The increases in airport charges and user development fees “makes Delhi Airport the most expensive airport in APAC (Asia Pacific) region as compared to Hong Kong and Kuala Lumpur, which are 70% cheaper, and more expensive than Osaka, Tokyo and Sydney," he added.

On 10 April, DIAL said it would have to close in two months if local airlines did not pay their dues. The airport said it was losing 2 crore a day.

It added that ticket prices would on an average rise by 290 for domestic passengers and by 580 for international passengers on account of the hike in user development fees.

In terms of this fee, Delhi airport, developed at a cost of 12,857 crore, will compare favourably to other major global airports where passenger fees range between $25 and $30, DIAL said.

Separately, DIAL sought a 24% return on equity but was granted only 16%. For quasi equity-based returns on refundable security deposits, Aera didn’t grant it any returns.

“In terms of profitability, Delhi airport company would turn profitable from this financial year. However, this increase is not sufficient to meet the return on equity expectation of GMR Infrastructure," said Vaibhav Jain, vice-president, institutional research, Religare Capital Markets Ltd.

The increases in airport charges were in line with his firm’s expectations, he said.

GMR Infrastructure Ltd’s shares rose 0.89% to 28.45 a piece on BSE Ltd on Wednesday, while the Sensex fell 0.33% to 17,151.29 points.

DIAL executives said the company will make a net loss of 900 crore for the financial year ended 31 March, double its loss in the previous year.

The GVK group-controlled Mumbai International Airport Pvt. Ltd, or Mial, which runs the Chhatrapati Shivaji International Airport in Mumbai, too will increase passenger fees after Aera on 18 April approved a levy of 100 per embarking domestic passenger and 600 per embarking international passenger starting 1 May.

The arrangement is for 23 months to bridge the airport’s funding gap of 876.27 crore.

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